Big Moves on the Forex on Friday
May 17, 2008For the better part of this past week, the Euro, Japanese Yen and British pound have been trapped within a tight trading range against the US dollar.
Even though the moves today in all 3 of these currency pairs have been relatively significant, especially in the EUR/USD, they pale in comparison to the moves in the Australian and New Zealand dollars.
The Australian dollar hit a new 24 year high on the back of rising gold prices and rumors that China could invest in Australian mining giant BHP Billiton while the New Zealand dollar rallied more than 1 percent.
The dollar fell the most against the euro in a month and depreciated versus the yen as a drop in consumer confidence and a surge in crude oil to a record increased concern U.S. economic growth will slow.
The currency dropped for the first time in four days against the euro and was down versus most of its major counterparts.
The Australian dollar touched a 24-year high against the greenback as crude oil pushed prices of other commodities up.
The dollar decreased 1 percent to $1.5594 per euro at 4:27pm in New York, from $1.5448 yesterday.
It earlier broke through $1.56 for the first time since May 1.
The U.S. currency dropped 0.7 percent to 103.96 yen, from 104.74.
The euro advanced 0.2 percent to 162.13 yen, from 161.79 yesterday.
The U.S. currency, which has risen 3 percent from a record low of $1.6019 against the euro on April 22, is down 0.7 percent this week, its second straight decline.
The yen has fallen 1.8 percent against the euro, the biggest drop since mid-April. It’s down 1 percent versus the dollar this week.
Crude oil rallied to the all-time high of $127.82 a barrel, leading commodities higher, as Goldman Sachs Group Inc. raised its forecast for the second half of this year to an average of $141 a barrel, citing supply constraints.
The correlation coefficient between oil and the euro-dollar exchange rate has been 0.95 for the past year, indicating they have moved in the same direction 95 percent of the time. The correlation is calculated based on the price changes of oil and the currencies.
The Australian dollar increased as much as 1.7 percent to 95.60 U.S. cents, the highest level since 1984, on higher commodity prices.
Exports of raw materials, such as iron ore, account for 17 percent of Australia’s economy.
Canada’s dollar was little changed after touching 99.43 cents per U.S. dollar, the strongest since March 19.
The currency has traded near parity with its U.S. counterpart this year after climbing 17 percent in 2007. Commodities such as oil account for about half of Canada’s exports.
The Forex finished the week at the following rates:
| EURUSD | 1.5593 |
| USDJPY | 104.0500 |
| GBPUSD | 1.9553 |
| USDCAD | 0.9997 |
| USDCHF | 1.0470 |
| EURCHF | 1.6328 |
| EURGBP | 0.7972 |
| EURJPY | 162.2500 |
| USDTWD | 30.6600 |
| AUDUSD | 0.9543 |
| NZDUSD | 0.7730 |
| USDSGD | 1.3675 |
| EURTWD | 47.8082 |
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